With revenues of $1.3 billion (Rs 5,957 crore) in 2003, and a market value of $10 billion (Rs 46,000 crore), Adobe Systems Inc. is one of the biggest developers of desktop software in the world. But the company has seen tough times in the recent past, and it was Bruce Chizen, President and CEO of Adobe, who led efforts to transform the point-product company to a provider of enterprise solutions. In India recently for a short visit, Chizen spoke to BT's Vidya Viswanathan on the company's transformation, arch rival Microsoft, and the threat from open source, among other things. Excerpts:

Adobe was in a spot some time back...

Our focus was predominantly on technology. And that was reflected in our performance. In late 1998, we had about $800 million (Rs 3,407.6 crore) in revenue and $500 million (Rs 2,129.7 crore) in cash, and our market value was about $1.6 billion (Rs 6,815.2 crore). It was pretty clear that the financial community didn't think we were worth much. And today, we're close to $1.2-1.3 billion (Rs 5,520-5,980 crore) in revenue. We have about $850 million (Rs 3,910 crore) in cash, and our market value is close to $10 billion (Rs 46,000 crore). That says a lot about what we've accomplished over the last five years.

How did you bounce back, when you had been written off?

A combination of a terrible quarter in August 1998 and then being tried to be taken over by a very small competitor and the perception that Adobe was a dinosaur and history forced us to change.

What did you have to do?

The people who were charted with taking the company forward were different from the people who were running the company at the time. As soon as the results of August 1998 hit, they (the Board) eliminated the bulk of their executive staff. That was when I was put in place to head all products and marketing. We had a new CFO who was good at turning around companies. We had a management team in place that knew what had to be done: focus, streamline, and execute. And we knew that the opportunity was ours to lose, because the base fundamental was there: we were a great technology company.

We have proven for the past 22 years that we can compete against Microsoft. Where good enough is ok, Microsoft is going to beat us. Where, customers care about quality every time they tried to compete they failed.

It helped that you were not seen as the hatchet man...

Unfortunately, I think I was. I was responsible for doing the first layoff (12 per cent of our workforce); that was a very painful experience. Prior to August 1998, we were very decentralised. Sales geographies had their own P&L and corporate marketing had its own strategic agenda. We decided to centralise the organisation in San Jose and eliminate redundant systems: we had a sap system in Japan, another in the US, and an Oracle one in Europe, none of which talked to one another. We had people around the world doing whatever they wanted: our logos, use of the brand, marketing initiatives were all different. And we never really put out what our vision, our mission, was. At the end of the day we want to focus on developing software for creative professionals, people who want the best, and people in the enterprise. That was our strategy.

The enterprise strategy: was that an insight after Pfizer started using PDF forms for their FDA filings?

Pfizer helped highlight the opportunity. We saw the Acrobat Reader becoming pervasive. Aggressive corporations like Pfizer were creating workflows around PDF and Acrobat Reader on their own with a little bit of our help. They came to us for help. We helped them develop applications for the easy creation and extraction of intelligence. Then we decided to build a bunch of server tools and do it more seamlessly. We also knew that we couldn't do everything on our own, so we bought Excelsior a year-and-a-half ago. We finally could offer solutions to corporations who were not prepared to invest millions and millions of dollars in it development. And that has become our enterprise strategy.

If a critical workflow gets digitised, will work stop if it doesn't work right?

Even today our software is critical. If you are printing on a printer and the way that printer works with postscript is not right, you would be pretty upset. You need to get a magazine out of the door on time using Photoshop to enhance an image for the front cover; that too is mission-critical. Adobe has also proven that it can move from one business model to another. At one time we were a postscript company selling to printer manufacturers. Yet today, other than Microsoft, we are probably the largest provider of desktop software in the world. Providing enterprise software required that we be sensitive to the needs of the enterprise. The first thing was to get the right people in place. We have hired people from BEA, IBM, Peoplesoft and Epiphany. Step two was to figure out partnership opportunities with enterprise software companies like SAP and IBM. We now have a partnership with SAP, who are incorporating our technology into NetWeaver, which is their future platform.

Which means that all statutory forms coming out of SAP will come PDF...

That's right. So, their 20,000 customers become potential Adobe customers. We have a relationship with IBM. So people using IBM's Content Manager can leverage our workflow. Third thing is to develop relationships with key system integrators. We announced a few partnerships-Accenture and EDS. In a place like India, there are some potential partnerships that could happen. Our big differentiator is something that no other company really has-direct access to the customer through the Adobe Reader. Microsoft has access, but requires that the customer pays them something; Adobe Reader is free and cuts across multiple platforms and device types. For any organisation that wants to communicate with a constituent that they don't control (for instance, a government to citizens, or a financial institution to a potential customer), we become the access mechanism. As we work more with SAP, IBM and others, we'll be able to integrate more seamlessly with their systems. And we can then work with system integrators to glue it all together.

Microsoft has also announced something similar, with InfoPack...

We have proven for the past 22 years that we can compete against them. Where good enough is ok, like internal document workflows, Microsoft is going to beat us. Where, customers care about quality of their communications, every time they tried to compete they failed. We had PostScript, they came up with Trueimage. They were able to deliver one printer from one manufacturer. They tried to compete with Photoshop and Illustrator by giving away Microsoft Photodrawer free with Microsoft Office. That product has gone away.

So, the other companies are beefing up on their research...

We have a 10-year headstart on this around PDF, which is a standard in government agencies around the world. If you look at what they've delivered with Infopack, you can't go outside the firewall. Then you'll have to buy Infopack. You cannot tell a bank to switch over to Microsoft's new system to do business with you. Also, every enemy of Microsoft is a friend of ours. And they have a lot of enemies.

What are you doing in terms of digital technology?

Our focus has to be on the desktop. Photoshop costs $609 (Rs 28,000). Customers who buy Photoshop don't care about price; they tend to want the best. But we realised there are a lot of people who want the Photoshop, but are very price sensitive. That is why we introduced Photoshop Elements ($99, Rs 4,550). Then we have Photoshop Album ($49, Rs 2,250), a free version of which was developed in India.

That's an area that Microsoft is heading...

Yes, it is; but we have been doing visual imaging since 1989. We also work with them. If you look at digital video, we are optimising for their (Microsoft and Intel) platform instead of Apple, which has its own solution. By working with Microsoft and Intel on video, we will have a cooler solution, but one that is much more affordable.

Is open source a threat to you?

Open source is only a threat to us if governments dictate open source over commercial software. We believe that the end customer will choose and pay for an innovative product. We've had open source products against us-gimp against Photoshop, Killustrator against Illustrator. Yet we continue to do extremely well.

Star Office is not bad...

Yes, but people still buy Microsoft's Office. The big threat today is government intervention. A government like China, which is currently contemplating saying you must buy "Made in China" only and it must be open source; we're not saying don't do open source, just don't dictate open source.

Relating to India, there's this big thing in the US about jobs going out of the US...

We will continue to take advantage of India. At the same time we will continue to hire in the US, but probably not as aggressively. Innovation will continue to occur in the US.

You might be a healthy company, but there are a lot of highly-trained people in the US who would be out of work...

We are continuing to grow as an industry and will continue hiring people in the US. The other thing is that more than half of our revenue comes from outside the US. So the highest growth markets, long term, will end up being places like India and China. And by having presence in those countries, we will increase export dollars.

Who are opposing it?

They are a big group of people; some of the policy makers. The White House administration understands it; they are very supportive of free trade. Those representatives sensitive to unions are very concerned about it. This can only improve with education.

But this has happened in the US many times before...

The concern is that we will be similar to other industries where the jobs went away. We don't believe that because innovations will still occur in the US because of the dynamics there: a capital structure market, universities, VCs that continue to invest aggressively and a number of high-tech companies all located in the similar environment, fuelling discussion and collaboration. Innovation will continue there as long we allow free trade, universities continue to educate computer scientists, and the government fosters higher education.

Are you going to have PDF in local languages?

We will, but we haven't said when. But in particular the Acrobat, PDF, and the Reader will need to be localised for local Indian languages.